Federal government offers grant to upgrade from oil to electric heat pumps

Federal Government Grant Photo by Shutterstock/charnsitr

The federal government is offering a $5,000 grant to eligible Canadian homeowners willing to make the switch from oil to electric heat pumps.

During a press conference last week, Immigration Minister Sean Fraser unveiled the $250 million Oil to Heat Pump Affordability (OHPA) grant, a new program designed to transition thousands of Canadians from heating their households with oil to electric heat pumps.

“By transitioning away from oil heating, homeowners can save thousands of dollars in their annual heating bills, putting more money back in peoples’ pockets while also reducing pollution and creating new jobs across the country,” Fraser said.

The OHPA grant builds on the government’s Low Carbon Economy Fund (LCEF), another $250 million grant announced in September, primarily aimed at converting Atlantic Canada households from oil to electric heat pumps.

The OHPA grant is targeting low to middle-income households, providing $5,000 to be used towards purchasing and installing an electric heat pump, safely removing a household’s oil tank, and electrical upgrades required for the new electric heat pump.

To help homeowners carry the costs, the $5,000 will be provided up front, rather than after the installation. The government estimates that switching from oil to an electric heat pump could save a household between $1,500 and $4,700 per year on home energy bills.

To be eligible for the OHPA grant, a household’s after-tax income must be at or below the median household after-tax income defined in Statistics Canada’s Low Income Measure Threshold—approximately $53,140 for a family of four. The household must be oil heated as of January 2023, demonstrated through copies of oil fuel bills from the preceding 12 months. And it must be the owner’s primary residence. This mean secondary properties, such as cottages, are not eligible for the grant.

The Ministry of Natural Resources said that it will be thoroughly vetting each applicant to ensure the grant money is being used as prescribed. The homeowner will have to submit required documents to the ministry, including oil fuel bills and tax forms, to prove they’re eligible. The government will then provide the homeowner with the funding. After the installation is complete, the homeowner will have to submit receipts and invoices to the government.

The reason the government is pushing greener home initiatives, such as the OHPA grant, is its goal of reducing greenhouse gas emissions by 40 to 45 per cent by 2030. Heating a home with oil produces more greenhouse gas emissions than gas or electricity. The widespread installation of electric heat pumps is predicted to significantly lower harmful emissions.

Despite the name, electric heat pumps can both heat and cool a home, and have been used for decades in Canada.  Depending on the size of the electric heat pump, installation costs could range from $3,000 to $15,000.

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